'Labor union backs Indosat sale plan'

'Labor union backs Indosat sale plan'

Dadan Wijaksana, The Jakarta Post, Jakarta

The government should be able to complete the high-profile
sale of shares in international call operator PT Indosat to
foreign investors this year, after it finally wins support of the
labor union.

State Minister of State Enterprises Laksamana Sukardi said
that he had met with representatives of the union -- which had
previously opposed the sale plan -- at his office on Tuesday, and
managed to settle their differences.

"We have spoken with the company's union and management, and
everything has been cleared now. The meeting went well,"
Laksamana told reporters.

He declined to provide details. Attempts to seek confirmation
from union leaders were unsuccessful.

The labor union of the state-owned telecommunications firms
had previously launched a street rally to protest the
government's plan to sell a majority shares in the publicly-
listed Indosat on the grounds that the company was a strategic
national asset.

The union had even threatened to hold a general strike if the
government proceeded with the plan. It also demanded that
Laksamana resign.

This created doubts over the Indosat sale plan, which is part
of the government 2002 crucial privatization program aimed at
raising some Rp 6.5 trillion (US$650 million) in proceeds to help
finance the state budget deficit.

The government planned to sell up to a 45 percent stake in
Indosat in two stages, first in June where some 14 to 15 percent
of the shares would be sold via the stock market, and the
remaining 30 percent to be sold to a strategic investor.

The government, which holds 65 percent of the stakes in
Indosat, is hoping to raise proceeds of between Rp 4 trillion and
Rp 5.1 trillion from the Indosat share divestment.

Besides the much-needed proceeds, the smooth process of the
program would also pave the way for a revival of confidence from
investors that the country was moving ahead with its economic
reform program.

The government failed to implementing a privatization program
during the past two years due to various reasons including
opposition from legislators, employees and local people.

Elsewhere, Laksamana repeated his intention to consider
acquiring Deutsche Telekom's stake in PT Satelindo -- an Indosat
subsidiary -- through a right issue, as part of efforts to
increase the value of the parent company, before being sold to
private hands.

Now that the labor union supports the move, Laksamana said the
government was focusing on restructuring Satelindo, so that the
target of selling Indosat in the first semester of the year would
still be attainable.

"We're aiming to complete it in the first semester, but we'll
keep an eye on the momentum and the market situation."

Deutsche Telekom currently holds a 25 percent stake in
Satelindo, the country's second largest mobile phone company; the
government controls the rest.